The Pears Report – don’t mention the war

Tony’s war on renewables may be ongoing, but what has been the effect? It’s not such an easy war to win, writes Alan Pears.

TONY Abbott did his best to kill off renewable energy when he was PM—and he’s still trying it seems. But it is interesting to look back at the consequences of his efforts. The war on renewables was meant to reduce electricity prices. But it has done the opposite—and a lot more.

The big negative for renewables has been that the uncertainty created by the war led to a collapse in investment in large renewable energy projects. And the compromise 2020 large-scale renewable energy target (LRET), reduced from 41,000 GWh to 33,000 GWh, is now driving much less renewable energy development.

However, even the reduced LRET still means a lot of renewable generation capacity has to be built fast, from a near standing start, to generate 55% more renewable electricity than was produced in 2016, by 2020.

A report for the Clean Energy Regulator (www.bit.ly/CERMTRET) estimates an additional 6000 MW of generation capacity will be needed to meet the reduced 2020 target—a doubling of the renewable generation capacity installed since 2001. This has driven up the price of large-scale generation certificates (LGCs) from a long-term price of $30–$40 to $80–$90 (see box).

So it is now very profitable to build new renewable generation capacity under the LRET, and we are seeing a boom. Of course, Mr Abbott can now complain about the high price of renewables—that he caused by frightening investors which, in turn, has led to a shortage of new renewable capacity and LGCs. As in all markets, a shortage has driven up prices.

But Australian media have noticed that renewable energy prices for new generation everywhere else, and in bids for ACT government auctions (which are outside and additional to the LRET), are falling. Without the LRET uncertainty, LGC prices should have been stable or even falling as more new, cheaper generation was built.